After months of legal wrangling, the latest Gulf of Mexico oil and gas auction finally happened Wednesday, with more than two dozen companies submitting nearly $442 million worth of bids to lease tens of millions of acres for offshore drilling.
In all, 26 companies, including Shell, BP, Chevron and Repsol, submitted $441.9 million in bids. Of that total, $382 million represented successful bids, according to Bureau of Energy Management officials. More than 72 million acres were made available.
The auctions allow companies to lease space in offshore waters and explore for oil and gas.
The American Petroleum Institute, the nation's largest oil and gas lobbying group, said Wednesday's bid total was the highest for an offshore auction in nearly a decade.
Before the final tally was calculated, U.S. Sen. Bill Cassidy, R-Baton Rouge, had already hailed the auction as a win for the nation’s energy sector.
“The strong showing in today’s sale sends a signal that industry is optimistic about the future of energy production in the Gulf,” said Cassidy. “It’s a win that this sale took place after years of slow-walking by the Biden administration. This should be motivation to hold more sales, not fewer.”
Offshore oil and gas auctions will be few and far between in the near future. The Biden administration’s next five-year plan for offshore leasing, which was finalized last week, calls for three offshore auctions through 2029, all in the Gulf of Mexico. None will be held in 2024.
Wednesday’s auction — also known as a lease sale — was one of two required for 2023 by the Inflation Reduction Act, which was passed in 2022. The first took place in March, though environmental groups have challenged the results of that auction.
The Wednesday auction was initially scheduled for September. However, a legal fight emerged over how much acreage would be available, which pushed the auction to December.
After initially offering 73.4 million acres for bidding, the Bureau of Ocean Energy Management in August said it would reduce that scope to 67 million acres. That reduction was tied to a settlement the Biden administration reached with environmental groups in an effort to help the Rice’s whale, a critically endangered Gulf species.
Oil and gas advocates, including API and Louisiana Gov.-elect Jeff Landry, sued over that reduction. Environmental groups filed their own suit to block the lease sale, but the fossil fuel advocates ultimately won in court. After a federal appeals court upheld a district court ruling that the auction had to offer the originally proposed acreage, the event was rescheduled to Wednesday.
Officials from Earthjustice, an environmental law organization that had sued the Biden administration over the auction, slammed the oil and gas industry’s “push to expand offshore drilling despite the accelerating climate crisis and the public health effects of its polluting operations.”
“With this sale, oil giants refused to accept baseline protections for one of the most endangered marine mammals in the world,” Earthjustice attorney George Torgun said in a statement. “(The Department of the) Interior can and must be doing far more than it has to curb the industry’s excess or the result could be the first human-caused whale species extinction in recorded history.”
Meanwhile, National Ocean Industries Association President Erik Milito called for Congress to intervene and put more auctions on the schedule.
“In our forward-thinking industry, securing new lease blocks is vital for exploring and developing resources crucial to the U.S. economy,” Milito said in a statement. “Additional offshore acreage is necessary to sustain and expand energy production in a region known for among the lowest carbon intensity barrels globally. The Gulf of Mexico is a prime economic engine and investment area, and this was the last chance for companies to secure leases in the near term.”
U.S. House Majority Leader Steve Scalise, a Jefferson Republican, said the auction showed "resoundingly strong demand" for Gulf drilling and said more auctions are needed.
"While I'm happy to see today's lease sale move forward with such strong interest, President Biden has failed to schedule any lease sales for 2024, and is putting America's energy and national security in jeopardy," Scalise said in a statement.